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A new Financial Times article reveals that the core technologies that China wants to lead the world in as part of its overarching Manufacturing 2025 initiative are coming under fire from other nations.

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Global Concerns Over China’s “Manufacturing 2025” Initiative Highlighted In New EU Report

A new Financial Times article reveals that the core technologies that China wants to lead the world in as part of its overarching Manufacturing 2025 initiative are coming under fire from other nations.

A new Financial Times article reveals that the core technologies that China wants to lead the world in as part of its overarching Manufacturing 2025 initiative are coming under fire from other nations.

manufacturing 2025

China first laid out its Manufacturing 2025 initiative in May of 2015, which included objectives to internally develop nationwide competencies in 10 critical sectors, including New Energy Vehicles, Rail Transport Equipment, Automated Machine Tools and Robotics, and Power Equipment (which includes Solar and Wind Technologies).

This push is the next iteration in the country’s journey towards a better future as it takes a look at the past and maps out a better life for its 1.4 billion citizens. China has long been known to be a technology copycat, with Chinese tech giants Baidu, Alibaba, and Tencent walking a tenuously similar path to those first mapped out by US tech titans Google, eBay, and Facebook. However, the new plan crafted in Beijing seeks to change not just this perception of the country, but also the reality underneath it.

The initiative maps out strategies for not only fostering “indigenous innovation” but also for forcing foreign companies to divulge details of critical technologies in exchange for access to Chinese markets. A newly published European study on China’s Manufacturing 2025 initiative highlights several examples of the way the initiative seeks to accomplish its objectives and how they are already causing global concerns:

“Under recently passed legislation in the new energy vehicle (NEV) industry, for example, European business is facing intense pressure to turn over advanced technology in exchange for near-term market access; in the field of industrial robotics, government subsidies are contributing to overcapacity in the low- and mid-tiers of China’s market; and in the information technology industry, European business is seeing market access constrict further. “

The report details how, in addition to these domestic-friendly policies having the potential to strip technologies from foreign companies coming into China, the Manufacturing 2025 initiative is creating a market that heavily favors domestic companies.

Whether these early concerns are just manifestations of the growing pains in the next chapter of Chinese manufacturing or are truly representative of the new position China is taking to protect itself and its citizens from global competition will have to play out over the next few years or decades. But one thing is certain — nations around the world are taking notice and are not receiving the news favorably.

The balance of increased innovation coming from China and market access as a result of Manufacturing 2025 is not perceived as healthy or sustainable, with the short-term impacts summed up in the European Chamber report in a single statement: “the world would benefit from additional innovative Chinese products and services, but not at the expense of inhibiting market forces through state-driven schemes. “

manufacturing 2025

Highly automated Tesla production line. Image Credit: Tesla

This push from China comes as the global manufacturing hub seeks to evolve away from the low-value, labor-driven economy it has become known as towards a tech-centric, automated future. The push aims to automate low-value manufacturing jobs though the implementation of autonomous robots. Compared to other nations, China has been very slow to adopt such technology.

Automation of these positions will continue to keep manufacturing costs low in the country in the face of rising wages. Though, the larger impact to employment numbers in a country of this size is a major concern.

Source: European Chamber ReportFinancial Times via Monica Araya

 
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Written By

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in BYD, SolarEdge, and Tesla.

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